O`hare Gives Up Revenue For Minority Bids

November 19, 1985|By John Camper.

Thousands of square feet of valuable new retail space at O`Hare International Airport have been vacant for months, some for as long as a year, while the city looks for minority businesses to help run concessions.

If filled with retail shops, the same space could produce rental income of $500,000 to $1 million a year, according to city aviation officials who also say the airport is a more lucrative sales location than even North Michigan Avenue.

Retailers have been clamoring to get into the new spaces to sell their wares to the estimated 100,000 people who pass through the airport each day. More than 40 firms applied last year for the right to sell such items as clothing, books, jewelry, crystal, arts and crafts, greeting cards, flowers, luggage, toys, perfume and cameras.

Nevertheless, Deputy Aviation Commissioner Earl Hord said he rejected all the proposals because hardly any of the bidders were minorities or had minority partners.

department, and things have taken longer than we thought they would.``

Hord`s boss, Jerome Butler, who replaced Thomas Kapsalis as aviation commissioner last June, said the city could have filled the new spaces rapidly ``if we had just gone to the big national organizations and given them exclusive rights to sell each type of product.``

But Butler said the city administration wants to hire local businesses whenever possible.

``You see the same T-shirts, the same merchandise in every airport,``

Butler said. ``We want concessions that are representative of Chicago. That`s a change in policy from the past, when so many of the O`Hare businesses were national operations.

``And I`m sure the new city administration took a look at the all-white concession policy of the past and decided it wanted to change that.``

O`Hare contracts are covered by the Washington administration`s requirement that 30 percent of all city business be awarded to minorities and women.

Butler acknowledged that the original applications ``have been languishing for more than a year`` and that the process ``certainly has been bogged down.`` He said the concession proposals are being reviewed by a new committee, comprising representatives of the city departments of aviation, purchasing and law and of the mayor`s and comptroller`s offices.

``We hope this will speed up the process,`` he said. ``We`re trying to take the backlog of proposals, evaluate them and go forward with those that are worthwhile.``

The vacant spaces are in a series of free-standing ``concession islands`` in the waiting areas near the concourses leading to planes. The city is spending $1.5 million to construct eight such islands with a total of 12,000 square feet of usable space.

The first island was completed late last year, and additional ones have been finished every few months. When the entire project is completed three months from now, the amount of vacant space will increase from the current 3,750 square feet to about 6,750.

Each square foot of concession space produces an average of $150 of annual rental income for the airport, city officials say. Retail space on North Michigan Avenue, by comparison, rents for $75 to $100 per square foot, according to real estate sources.

``O`Hare is some of the most valuable real estate in the country from a merchandising standpoint,`` Butler said. ``It`s more valuable than Water Tower Place.``

Last month, the Washington administration offered to let a failing majority-minority partnership abandon its O`Hare drugstore concession and avoid paying nearly $12 million it had guaranteed the city over the five-year life of its lease.

The drugstore concession was run by Aeroplex O`Hare, a joint venture of a large Dallas airport-service chain and three black Chicago businessmen. The partnership has not paid any rent to the city since February, but it continues to run the O`Hare drugstores while the city seeks a new operator.

Last year, the administration awarded the multimillion-dollar O`Hare newsstand contract to Elson`s of Illinois, a subsidiary of a nationwide airport concessionaire, after David Franklin, a black Atlanta lawyer, joined the company to fulfill the administration`s demand for minority perticipation. Franklin paid $100 for a 20 percent interest in the company. Sources estimated that his share of Elson`s could be worth as much as $1 million over the five-year term of the contract.

Butler said he believes his new interdepartmental committee will help make future concession deals ``as straightforward and clean as we can make them.``

For example, he said, ``if the committee had been in place at the time of the Aeroplex bid, it might have noticed that the bid was much too high.

``I want to avoid sweetheart deals,`` Butler said. ``I want meaningful participation by minorities, not just front organizations. I want to provide the opportunity for existing Chicago businesses to enter the O`Hare market.``